By Mark Cotton,MarketWatch

NEW YORK – U.S. stocks ended sharply higher Friday as the June employment report wrapped up a week of solid economic data and helped the market weather news of the terrorist bombings in London.

The Dow Jones Industrial Average) was up 146.85 points, or 1.4 percent, at 10449.14, putting in its best one-day gain in more than two months. On the week, the benchmark index was up 1.4 percent.

The Nasdaq composite rose 37.22 points to 2112.88, taking the tech-rich index to its highest level in six months.

Strong gains for semiconductor, networking and software stocks underpinned the move.

On the week, the index rose 2.7 percent

The S&P 500 climbed 13.99 points to 1211.86, with the broad gauge posting a weekly gain of 1.5 percent.

“Despite major exogenous shocks, the undertow of economic reports has been so good, we’re going to end the week up,” said Jim Paulsen, chief investment officer at Wells Capital Management.

Paulsen said it’s hard to ignore what has been good manufacturing and services data from the Institute for Supply Management, retailers’ robust figures for June sales, benign weekly jobless claims and a June employment report showing solid job growth.

“If oil was at $50 rather than $60, I think the S&P would already be at new highs for the cycle,” he said.

Within the Dow Industrials, Alcoa Inc. shares (AA) rose 4.3 percent to $27.20 on better-than-expected quarterly results reported after Thursday’s close, marking the unofficial start to earnings season.

Also, General Electric Co. (GE) climbed 2.4 percent to $34.99, buoyed by positive broker comments from Morgan Stanley and Smith Barney.

And International Business Machines (IBM) gained 2.5 percent to $79.30 amid some positive analyst comments on the company’s second-quarter outlook.

The much-awaited June employment report offered a mixed picture regarding the ability of the U.S. economy to generate jobs.

The U.S. unemployment rate fell to a four-year low of 5 percent in June, but the economy added only 146,000 jobs when economists forecast by MarketWatch had been looking for a gain of 194,000.

Among 278 industries, 55 percent were hiring in June, down from 57 percent in May.

“But there was a net 44,000 revision to the previous two months, so the net number was 192,000, very close to consensus,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics. “We are a bit disappointed but this still indicates a tightening labor market, as does the dip in the unemployment rate.”

Among other economic data of note, inventories at U.S. wholesalers rose a modest 0.1 percent in May to $350.1 billion, the Commerce Department reported.

On the broader market for equities, advancers outpaced decliners by more than three to one on the New York Stock Exchange, and by nearly same score on the Nasdaq. Volume was 1.4 billion on the Big Board and 1.6 billion on the Nasdaq.

Crude-oil futures ended lower even as concern remained that offshore petroleum and refinery installations in the Gulf of Mexico could be damaged as Hurricane Dennis sweeps toward the region, probably this weekend.

The market will likely “wait till Monday to really see the actual damage caused to the platforms,” said Agbeli Ameko, a managing partner at First Enercast Financial. “The key will be how long it will take to get production back online and if there will be significant production shut-ins for a longer than expected period,” he said, adding: “The market could go up big on Monday.”

Crude for August delivery was down $1.10 at $59.63 a barrel, off a morning high of $61.90. On the week, the benchmark contract is up 1.5 percent.

The dollar put in a choppy session and was last trading mostly lower against the world’s major currencies.

The euro was up 0.2 percent at $1.1956. Against the Japanese yen, the dollar was flat at 112.13. The British pound continued to suffer from the aftermath of Thursday’s terrorist bombings, with sterling off 0.4 percent at $1.73.

The uptick in the dollar sent gold prices lower on the day, wrapping up a week in which the precious metal logged a $5 decline.

On the bond market, long-term U.S. Treasuries ended lower. The 10-year benchmark note was down 13/32 at 100 3/32, with its yield ($TNX) standing at 4.11 percent.

Alcoa shares rallied as the aluminum maker’s quarterly earnings beat Wall Street forecasts by a penny. Strong results from its alumina business, the $219 million sale of a stake in Norwegian metals company Elkem and $120 million in tax benefits helped offset massive restructuring costs and falling metal prices.

GE gained after Morgan Stanley analyst Scott David said the industrial conglomerate’s stock has more upside potential than downside risk.

Meanwhile, Smith Barney analyst Jeffrey Sprague said GE’s recent decline has been exaggerated by technical factors and looks overdone, as orders remain very strong, earnings clarity is high and organic growth is robust.

Away from the Dow, shares of Accenture Ltd. (ACN) surged 9 percent to $24.21 after the company reported better-than-expected quarterly earnings amid strong demand for consulting and outsourcing services.

But it was not all good news on the earnings front.

Shares of Siebel Systems (SEBL) fell 2.3 percent to $8.59 after the software company projected second-quarter revenue at $312 million to $314 million, below the average analyst forecast of $319.2 million.

In other news, former Morgan Stanley chief executive Philip Purcell will receive about $44 million in fiscal 2005 and 2006 combined, depending on the company’s earning results those years, according to a regulatory filing released after the bell Thursday.

Purcell, who resigned under pressure from the investment bank (MWD) on June 30, could earn more or less than $22 million a year based on the company’s performance, the company said in its filing. Morgan Stanley’s shares fell 22 cents to $53.12.

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(c) 2005, MarketWatch.com Inc.

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AP-NY-07-08-05 1825EDT

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